Director, ETHICSearch
The ABA Standing Committee on Ethics and Professional Responsibility recently issued Formal Opinion 08-451 Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services. This opinion discusses the ethical obligations lawyers have when they hire legal professionals outside the firm to provide legal and nonlegal support services.
At the outset of the opinion, the Committee noted that outsourcing allows lawyers to reduce costs to their clients, and that it also enables small firms to take on labor intensive matters that they might otherwise not be able to staff.
Competence; duty to supervise
The Committee stated that while there is nothing inherently unethical about outsourcing, lawyers who are ultimately responsible to the client have an obligation to provide legal services that are rendered competently under Rule 1.1 Competence of the ABA Model Rules of Professional Conduct. The outsourcing lawyer also has an obligation to properly supervise lawyers and nonlawyers under Rules 5.1 Responsibilities of Partners, Managers, And Supervsiory Lawyers and 5.3 Responsibilities Regarding Nonlawyer Assistants.The opinion states:
Rule 5.1(b) states that "[a] lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct." Correlatively, Rule 5.3(b) requires lawyers who employ, retain, or associate with nonlawyers to "make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer." These provisions apply regardless of whether the other lawyer or the nonlawyer is directly affiliated with the supervising lawyer’s firm.
The Committee offered the following suggestions to help the outsourcing lawyer comply with the duties of competence and supervision:
- The lawyer could conduct background checks of any lawyer, nonlawyer or placement agency involved;
- Interview the lawyers involved, and assess their educational background;
- When working with an intermediary, inquire into its hiring practices so as to ascertain the character of the employees who are likely to have access to client information;
- Investigate the security measures in effect in the provider’s premises, including its computer network and refuse disposal systems;
- Depending on the circumstances, it may be prudent to conduct a site visit in order to get an impression of the professionalism of the lawyers and non lawyers involved.
When the work will be outsourced to a foreign country, the outsourcing lawyer should also ascertain whether the legal training received in that country is comparable to that in the United States, whether legal professionals in that country share the same core ethical principles with lawyers in the United States, and whether there is an effective professional discipline system. If these conditions are not met, the Committee stated, this does not necessarily mean that the work cannot be outsourced, but rather that the outsourcing lawyer will have a heightened duty to scrutinize the work produced for the client.
The Committee also recommended ascertaining the extent to which client property and other confidential client information may be subject to seizure in local court proceedings. In addition, lawyers should evaluate the risk that client information may be lost or the project disrupted in the event of a dispute between the lawyer and the service provider.
Disclosure, confidentiality agreements, fees and unauthorized practice
The Committee also addressed whether the client would need to be informed that certain services performed on his behalf had been outsourced. Beginning its analysis, the Committee drew a distinction between an earlier ABA Formal Ethics Opinions 88-356 Temporary Lawyers (1988), which had stated that under circumstances where temporary or contract lawyers are closely supervised by the hiring firm, the client need not be given notice that they are working on their matters. In the outsourcing context, the Committee stated that because of the typically attenuated nature of the relationship between the lawyer and the outsourced individuals, under most circumstances, the client would have to be informed. Furthermore, confidential information protected by Rule 1.6 could not be revealed to the outsourced individuals without client consent.
Lawyers who outsource should also have in place confidentiality agreements to protect against wrongful disclosure, and should check to see if the outside provider has done work for any of their client’s adversaries on the same or substantially related matters. Under such circumstances, the Committee stated that the lawyer could choose another provider.
The fees charged must be reasonable. The Committee stated that the lawyer could only bill the client the firm’s actual cost plus a reasonable share of overhead. Under circumstances where the work is performed off-site, however, overhead costs would be minimal, and the lawyer can bill only for the actual cost plus a reasonable amount for the cost of supervising those services unless the client agrees to pay a higher rate.
Finally, the Committee noted that lawyers should be wary of Rule 5.5 Unauthorized Practice of Law; Multijurisdictional Practice of Law and the unauthorized practice of law, and should avoid assisting others to practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction.
© 2008 American Bar Association
No comments:
Post a Comment